The Back Office Steps into the Limelight

Diligent, hardworking, conscientious—these are the words most often associated with the firm’s administrative core also known as “the back office.”

A back office capable of discharging its responsibilities effectively and efficiently enables the firm to attract a wider range of capital, support growth, and ensure that its most valuable assets—its people and reputation—continues to appreciate year over year.

WHY HAS BACK-OFFICE PERFORMANCE BECOME MORE VISIBLE
AND MORE CRITICAL TO THE FIRM?

The competition for capital may be the single biggest factor bringing the back office into the limelight. Some funds can still raise money easily, but this isn’t the experience across the board any more. There’s a have-and-have-not situation where certain funds struggle to raise capital and, in some cases, end up not getting access to the capital they need.

These firms are starting to realize that it’s no longer enough to demonstrate a solid track record of delivering value. They need to focus on the infrastructure supporting the fund and its investors. Your investment performance might attract investors, but if you don’t have a solid back-office plan or platform, that could be enough to scare them away.

Due diligence is no longer a one-and-done event, either. Too many institutional investors have had the experience of conducting their initial due diligence and checking all the boxes, only to find compliance or service issues still came up as the firm inevitably changed over time.

As a result, they want to check in regularly to keep tabs on their investments. Ten years ago, it would have been rare for us, as the outsourced fund administrator, to schedule an annual check-in call with the LP. Today, it’s best practice for institutional investors.